I apologize in advance for the long post. I am looking for advice on the best strategy for financial aid.
Background:
My son is starting college in the Fall of 2018
He is choosing between two state school programs in NJ (Rutgers & TCNJ)
I have been unemployed for the last 18 months, but I am starting a new job in March 2018
After losing my job in late 2016, I received a lump sum severance payment increasing my 2016 income. The FAFSA for the 2018-19 school year based on my 2016 tax return that includes this extra income.
We received no financial aid from one of the schools and $3k a year from the other.
My 2017 tax return is substantially less ($20k)
Both schools have a policy that they won’t look at a special circumstance appeal for financial aid until the student has sent in their admissions deposit. It looks like we will have to pick a school without knowing ahead of time which one will offer the better overall package.
Questions:
If we file for an appeal for a special circumstance review for financial aid for the upcoming 2018-19 school year, will this impact the Fall 2018 FAFSA (for the 2019-20 school year)? I am asking because I expect my son will get more financial aid during his sophomore year due to my low 2017 income.
Following on from above, is there an advantage to not appealing for more financial aid for my son’s freshman year given that our EFC will be zero or close to zero for his sophomore year? I would prefer to get help for his freshman year as money is tight now, but I could make it work and wait for the sophomore year aid if that is best overall.
When looking at the appeal process, there is wording that implies the parent must currently be dislocated (unemployed) in order to be considered for a change in financial aid. I expect to start a new job in a few weeks and will likely not be unemployed anymore by the time my son chooses a school and we start the appeal process. Does this make sense given I truly was unemployed for 18 months and only recently have started working?
Sorry to hear about your unemployment, but congrats on the new job!
Did your child apply to any schools that take the CSS? Those schools have more FA to offer and will accept an appeal immediately.
If not, I suggest that you go IN PERSON on Monday to the FA office of each school and ask to meet with someone. Try to make an appointment. If you can’t, just walk in. You’re probably not too far from either one if you’re in state. Tell them that your 2016 income is not representative of your situation because of a one-time lump-sum infusion of money. Bring your 2016 and 2017 tax returns with you and any other documentation you feel would be helpful. Maybe some kind of evidence that you lost your job.
There is no advantage to not appealing. Next year will be based on your 2017 tax year.
Seems kind of crazy that they won’t accept an appeal until after you make a deposit.
FA received in the fall does not get reported on the FAFSA you file for the next school year.
Why do you think the EFC for next year will be $0? Your income was $20k lower, but that doesn’t mean the EFC will go to $0. If the EFC is $0, he’d get a Pell grant, and fully subsidized loans. What the school would give additionally is hard to tell.
Thanks to everyone for the replies so far. I am very thankful to have a job again after such a long gap. The poster above is correct that my total household income was around $20k for 2017. That includes my wife’s part time job and the remaining portion of unemployment benefits. 2018 will be a better year.
All of the schools that my son applied for used the FAFSA. He is still waiting to hear from a few more schools, but the two NJ state schools are his first choice based on the major he is looking at. He will be visiting the schools again in the next few weeks to decide which one to pick. The financial aid is only part of the decision.
I will look into visiting the FA offices and see what I can do about an appointment. Both have policies that they won’t look at an appeal until the paperwork and forms have been filled out.
I wasn’t sure if Pell Grants were available outside of the FAFSA process. I could see how a federal program might have to be careful with double dipping with the new prior-prior year format.
One more question, when my son fills out the FAFSA form in the fall of 2018, am I to answer the dislocated worker question based on the tax year (2017 when I was unemployed), or the present?
If neither will review the special circumstance forms until a deposit has been paid, this could be one of the rare instances in which double-depositing makes sense. Think about that too.
Good idea. Double deposit today and get your appeals in on Monday.
Also, what will be your new income once you start the job? Do you own a home? If you don’t get enough FA due to the one-time payment you got in 2016, is it possible to take out a home equity line of credit to help with college expenses until you get back on your feet? Interest rates are very low. We have one for 3.65%
The new income will be about 15% less than my 2016 income (outside of the severance). By the time my son’s junior year rolls around, I expect our EFC to go back up significantly and a good portion of the FA will go away (However, that is the same year that my younger son will be starting college). We do have a HELOC on our home, but it is currently maxed out due to my unemployment. The longer than expected time out of work ate through our emergency fund, my severance, and into the HELOC. I do expect to have a good portion of it paid back by the time my son goes to school. I can use some of that for anything not covered by FA. We also have our retirement account, but that is a last resort.
Neither of these schools meets full need for all accepted students. The most this student will gain is a portion of the Pell Grant…or maybe all of the Pell Grant. And possibly any state aid that is based on the FAFSA EFC.
So…you are looking at $5900 max in Pell money.
@mommdc IIRC you posted about some state Grant in NJ? Maybe? What would that be and what is the requirement?
I’m pretty sure you can use some 401k funds for educational expenses. But that would be a last resort.
Applying to private schools that meet full need would have given you more FA and resulted in a price lower than that of the state schools. But I know that’s water under the bridge.
As a follow-up to my original post, I did file a financial aid appeal with all of the required material for the Special Circumstances review. We got the feedback a few weeks ago. My appeal was accepted, BUT the only thing that was changed was that $3000 of my son’s $5500 student loan was converted to subsidized. We will squeeze by for the next year and should be in a little better shape for financial aid the following year due to the 2 year look back for income. Thanks again to everyone for their help!